Wednesday, January 04, 2006

More Top-to-Top Counts

Three months ago I illustrated one of George Lindsay's favorite short term timing methods, the top-to-top count.

Linday's idea is basically a simple one. Identify a "compact" top formation and focus on the low day of a reaction just prior to the exact top. This is the "key" date. Then count forward 105 calendar days from that key date. The result is usually very close in time to another significant top. Of course, this explanation is a bit of an oversimplification of Lindsay's technique. If you want to learn more you will have to purchase a copy of "Selected Articles by the Late George Lindsay" which can be obtained from Investor's Intelligence whose contact details you can find here.

The daily chart above this post is an updated version of the chart from my early October post on this subject.

The compact top formations are identified in blue, the key dates in red, and the resulting forecasts appear in red underneath the price bars.

The first prediction correponding to point A was for a top on November 12 but even allowing for the usual fudge factor this forecast was wrong. The results of the forecasts corresponding to the key dates corresponding to points B and C are depicted by the purple lines labeled B and C and speak for themselves.

The compact top formation that developed during December gives us two key dates labeled D and E. The first forecasts a top on or about March 17, 2006 while the second forecasts a top on or about April 5, 2006.

Lindsay said that in his experience every bull market top was also a short term top which was predicted by his top-to-top method. In the current situation I am willing to bet that the top of the advance which started from the October 2002 lows will develop on or very near one of the dated predicted by points D and E. This will be a full two months before the ideal top date predicted by the Three Peaks and a Domed House measurement but I think the latter measurement will probably predict the top of a test of the bull market high of late March or early April 2006.

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